Conversion Rate or Commission Payout?

Monday, March 10, 2008 3:45

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If you have a choice to choose either high conversion rate or high commission payout affiliate program? Which one will you choose?

If me, I’d say depends. Let’s do some calculation.

Right now you’ve product A and product B to promote as an affiliate. One is giving you 40% commission and another one is 75%. Both are $47 product.

Product A: 40% = $18.80/sale

Product B: 75% = $30.00/sale

Yeah. Definitely you want to promote product B, me too. Anyhow, you’re going to put the same amount of effort to promote the affiliate products. So, might as well choose the product B as it pays higher.

But what if the product B comes with lousy sales page and converts at only 2%? In contrast, product A has a powerful sales page and converting at 5%. Here we talk about the conversion rate.

If you’re new to the affiliate marketing, conversion rate is the ratio of orders to site visits. For example, you have 100 people visit your site, and 2 people place orders, means that your conversion rate is 2 percent. Simple math right?

OK. Assume that you have directed 100 visitors to product A and product B. Product A is converting at 5 percent which brought you 5 sales, while product B is converting at 2 percent which brought you 2 sales. So, how much you earned for each product? Let’s do some calculation again.

Product A = 5 sales x $18.80 = $94 earned

Product B = 2 sales x $30.00 = $60 earned

Which product are you going to promote if in this case? The answer is clear. I bet you’ll prefer to promote product A more than B even though product B give you a higher commission payout.

As an affiliate marketer, no matter which products you’re promoting, you’re going to put the same amount of efforts to promote them. So, why don’t choose a product that worth your time? And of course if can, choose a product that gives you high commission rate while, the sales letter conversion rate remain high.